The
Municipal
Fund
Accumulation
Program,
Inc.
FUND LOGO
Annual Report
December 31, 1994
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Program unless
accompanied or preceded by the Program's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
The Municipal Fund
Accumulation Program, Inc.
Box 9011
Princeton, NJ 08543-9011
<PAGE>
To Our Shareholders:
For the year ended December 31, 1994, The Municipal Fund
Accumulation Program, Inc.'s net annualized yield was 5.89%. Total
investment return for the Program for the 12-month period ended
December 31, 1994 was -6.44%, based on the change in per share net
asset value from $19.79 to $17.51, and assuming reinvestment of
$1.026 per share income dividends.
For the six months ended December 31, 1994, The Municipal Fund
Accumulation Program, Inc.'s net annualized yield was 5.78%. During
this period, the Program's per share net asset value declined from
$18.21 to $17.51, reflecting, in part, the generally disappointing
pattern of the municipal bond market during the last six months of
1994. For the six months ended December 31, 1994, total investment
return for the Program was -1.06%, based on the change in per share
net asset value and assuming reinvestment of $0.510 per share income
dividends.
The Municipal Market
During the three months ended December 31, 1994, the tax-exempt bond
market continued to deteriorate amid signs of a strong domestic
economy and a restrictive Federal Reserve Board. By the end of the
December quarter, municipal revenue bond yields had increased over
25 basis points (0.25%) to 6.97%. Interest rate volatility remained
significant, with yields fluctuating by as much as 10 basis points--
15 basis points weekly. Long-term US Treasury bonds also remained
very volatile during the December quarter. By mid-November, US
Treasury yields had risen over 35 basis points to 8.15% before
declining to end the quarter at 7.875%.
Tax-exempt bonds remained very attractive throughout the quarter.
Over the last three months, long-term municipal bonds yielded as
much as 90% of comparable US Treasury bonds. Yield ratios in excess
of 85% are considered historically attractive to long-term
investors. Additionally, with taxable equivalent yields in excess of
10% throughout the quarter, municipal bonds continued to represent
considerable value relative to other investment alternatives.
The municipal bond market's technical position remained very
positive throughout the December quarter. Approximately $36 billion
in long-term municipal securities were issued during the three
months ended December 31, 1994. This represents a decline of over
48% versus the December 1993 quarter. Similarly, $164 billion in
long-term tax-exempt bonds were issued during 1994, a 44% decline
from 1993 annual issuance levels. Also, estimates of net cash
available for reinvestment in early 1995, based on maturities,
coupon income, and advanced refunded maturities, were in excess of
$25 billion. However, this combination of reduced supply and sizable
future demand has not generated lower interest rates as would
normally be expected. Once current uncertainties regarding the
strength and volatility of the current economic expansion are
resolved, and, more importantly, when no further interest rate
increases by the Federal Reserve Board can be expected, the
municipal bond market appears poised to quickly respond to its
present favorable position and quickly recoup much of the price
deterioration suffered over the last quarters.
<PAGE>
Fiscal Year in Review
For fiscal year 1994, The Municipal Fund Accumulation Program, Inc.
maintained a fully invested posture in order to seek to enhance the
portfolio's yield. While this succeeded in generating generous
income flows, it subjected the Program to the volatility of the
marketplace and led to declines in net asset value. However, our
strict attention to credit quality helped to cushion the negative
price action of last year's marketplace to some degree given the
quality of the portfolio mix.
Portfolio Strategy
The six months ended December 31, 1994 provided a period of extreme
price volatility in the fixed-income markets because of the
uncertainty of contrasting economic signals, a vacillating foreign
exchange market for the US dollar, and the threat of building
inflationary pressures.
We restructured The Municipal Fund Accumulation Program, Inc. to
address the current volatility. Our strategy cushions the Program's
net asset value from negative price action. We sold lower-coupon
performance-oriented positions since their prices suffer the most in
a rising interest rate climate. Proceeds were systematically
reinvested in more market-neutral, and even defensive, securities
carrying larger coupons. In addition to creating a more "cushioned"
portfolio mix, the Program generates an attractive current return to
its shareholders. Secondly, we began purchasing a core of municipal
securities subject to the alternative minimum tax (AMT). Previously,
tight spreads between bonds subject to AMT and those not subject to
AMT, prevented the Program from including this paper. Market
volatility created opportunities by which these spreads have
widened, allowing us to bolster current return through the addition
of these securities. Part of these purchases were financed by
selling a percentage of the Program's prerefunded holdings. Selling
the prerefunded bonds allows us to capture the premium price
commanded by these securities prior to any run-off occurring as they
approach the redemption date. Although further volatility for fixed-
income markets is possible, we do not anticipate raising large cash
reserve positions. We intend to remain fully invested in the current
market, looking for signs of an economic slowdown and greater US
dollar stability which could lead to better bond prices in 1995.
Since the portfolio mix credit quality is always of primary concern,
75% of the Fund's securities are rated AA or better by one of the
major rating services.
In Conclusion
Zita C. Millett, who formerly managed The Municipal Fund
Accumulation Program, Inc., retired on September 28, 1994. The new
portfolio managers for the Program are Vincent R. Giordano and
Kenneth A. Jacob.
<PAGE>
We appreciate your ongoing interest in The Municipal Fund
Accumulation Program, Inc., and we look forward to assisting you
with your financial needs in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President and Portfolio Manager
February 3, 1995
The Municipal Fund Accumulation Program, Inc.
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in The Municipal Fund
Accumulation Program, Inc. compared to growth of an investment in the Lehman
Brothers General Municipal Bond Index: Beginning and ending values are:
12/84 12/94
The Municipal Fund Accumulation
Program, Inc.*++ $10,000 $22,314
Lehman Brothers General
Municipal Bond Index++++ $10,000 $24,731
[FN]
*Assuming transaction costs and other operating expenses, including
advisory fees.
++The Municipal Fund Accumulation Program, Inc. invests in long- and
intermediate-term state, municipal and public authority bonds
(including private activity bonds), the interest on which is exempt
from Federal income tax.
++++This unmanaged Index consists of revenue bonds, general obligation bonds
and insured bonds.
Past performance is not predictive of future performance.
<PAGE>
The Municipal Fund Accumulation Program, Inc.
Important Tax Information
All of the net investment income distributions paid monthly by The
Municipal Fund Accumulation Program, Inc. during its taxable year
ended December 31, 1994, qualify as tax-exempt interest dividends
for Federal income tax purposes. Additionally, there were no capital
gains distributions paid by the Program during the year.
Please retain this information for your records.
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Schedule of Investments as of December 31, 1994 (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Rating Rating Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama-- AA A1 $ 2,000 City of Birmingham, Alabama, General Obligation Refunding Bonds,
1.3% Series 1988, 8% due 10/01/2015 $ 2,157
AAA Aaa 5,000 Huntsville, Alabama, Health Care Authority Revenue Bonds (Health
Care Facilities), Series B, 6.625% due 6/01/2023 (c) 4,965
Alaska--0.1% A+ Aa1 690 Alaska State Housing Finance Corporation, Insured Mortgage
Program Refunding Bonds, First Series, 7.80% due 12/01/2030 713
Arizona-- A1+ VMIG1 2,600 Phoenix, Arizona, Variable Rate Demand Notes, Series 2,
1.4% 5.85% due 6/01/2018 (h) 2,600
AA Aa 3,000 Salt River Project, Arizona, Agricultural Improvement and
Power District, Electric System Revenue Bonds, Series C,
6.20% due 1/01/2012 2,905
AA Aa 2,000 Salt River Project, Arizona, Agricultural Improvement and
Power District, Electric System Revenue Bonds, Series A,
6.50% due 1/01/2022 1,968
Arkansas-- AAA NR* 2,625 Arkansas State Development Finance Authority, Single-Family
0.5% Mortgage Revenue Bonds, Series C, 6.60% due 7/01/2017 (j) 2,553
<PAGE>
California-- AA- Aa 3,000 California Housing Finance Agency, Home Mortgage Revenue Bonds,
11.1% Alternative Minimum Tax, Series A, 7.70% due 8/01/2030 3,085
AA- Aa 4,985 California Housing Finance Agency, Home Mortgage Revenue Bonds,
Alternative Minimum Tax, Series F-1, 7% due 8/01/2026 4,904
A A1 5,000 California State, General Obligation Bonds, 6.25%
due 9/01/2012 (g) 4,813
A A1 2,000 California State, General Obligation Bonds, 6% due 5/01/2018 1,814
A- A 8,000 California State Public Works Board, Lease Revenue Bonds (Department
of Corrections, Monterey County--Soledad II), Series A, 6.875%
due 11/01/2014 7,926
A- A 5,000 California State Public Works Board, Lease Revenue Bonds (Secretary
of State), Series A, 6.75% due 12/01/2012 4,948
AAA Aaa 4,000 California State Public Works Board, Lease Revenue Bonds (Various
Universities of California Projects), Series A, 6.40%
due 12/01/2016 (e) 3,908
A A1 2,500 California State, Various Purpose General Obligation Bonds, 6.25%
due 10/01/2019 2,516
AAA Aaa 2,000 Los Angeles County, California, Certificates of Participation
(Correctional Facilities Project), 6.50% due 9/01/2013 (c) 1,985
AA- A1 5,260 Los Angeles County, California, Transport Commission Sales Tax,
Revenue Refunding Bonds, Series B, 6.50% due 7/01/2013 5,063
AAA Aaa 1,125 M-S-R Public Power Agency, California, Revenue Bonds (San Juan
Project), Series E, 6.50% due 7/01/2017 (c) 1,108
AAA Aaa 1,250 M-S-R Public Power Agency, California, Revenue Refunding Bonds
(San Juan Project), 6.75% due 7/01/2020 (c) 1,265
AAA Aaa 4,500 Pioneers Memorial Hospital District, California, Refunding,
General Obligation Bonds, 6.50% due 10/01/2024 (e)(g) 4,384
AA Aa 2,000 San Francisco, California, City and County Public Utility
Commission, Water Revenue Refunding Bonds, 8% due 11/01/2011 2,159
AA- Aa 5,000 Southern California Public Power Authority, Transmission Project
Revenue Refunding Bonds (Southern Transmission Project), 6.125% due
7/01/2018 (a) 4,596
AAA Aaa 5,025 Stockton, California, Revenue Bonds, Certificates of Participation
(Wastewater Treatment Plant Exposition), Series A, 6.80% due
9/01/2024 (d) 5,048
Colorado-- AA NR* 3,230 Colorado, Housing Finance Authority, Single-Family Mortgage Revenue
2.5% Bonds, Alternative Minimum Tax, Series D-3, Guaranteed Mortgage,
7.20% due 8/01/2023 3,236
AA Aa 2,940 Colorado Springs (City of), Colorado, Utilities System Revenue
Refunding Bonds, Series A, 6.50% due 11/15/2015 2,899
AAA Aaa 5,000 Douglas County, Colorado, School District No. 1 (Douglas and Elbert
Counties Improvement Project), Series A, 6.50% due
12/15/2016 (c) 5,008
AAA Aaa 2,500 Garfield Pitkin and Eagle Counties, Colorado, School District
No. 1, 6.60% due 12/15/2014 (c)(g) 2,534
</TABLE>
<PAGE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Schedule of Investments as of December 31, 1994 (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Rating Rating Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Connecticut-- AA Aa $ 1,500 Connecticut State Housing Finance Authority, Housing Mortgage
1.3% Finance Program Bonds, Series B1, Sub-Series B-1, 7.55% due
11/15/2008 $ 1,557
AAA Aaa 2,000 Connecticut State, Development Authority, Water Facility,
Revenue Refunding Bonds (Connecticut Water Co. Project), 6.65%
due 12/15/2020 (e) 2,008
AAA Aaa 3,500 Connecticut State, Special Tax Obligation Revenue Bonds, Series B,
6.10% due 10/01/2011 (d) 3,407
Florida-- A A 1,750 Broward County, Florida, Resource Recovery Revenue Bonds
1.4% (Broward Waste Energy), 7.95% due 12/01/2008 1,889
AAA Aaa 1,000 Escambia County, Florida, Utility Authority, Utilities System
Revenue Bonds, Series A, 9.60% due 1/01/1996 (b)(c) 1,063
AA Aa 2,000 Florida State Board of Education, Public Education Capital
Outlay Bonds, Series B, 6.70% due 6/01/2022 2,004
AA Aa1 1,000 Jacksonville, Florida, Electric Authority Revenue Bonds (Saint
John's River Power Park System), Series 7, 8.875% due 10/01/2010 1,047
A+ A2 1,500 Saint Lucie County, Florida, Pollution Control Revenue Bonds
(Florida Power and Light Company Project), 10% due 4/01/2020 1,551
Georgia-- A+ A3 3,000 Burke County, Georgia, Development Authority, Pollution Control
7.0% Revenue Bonds (Oglethorpe Power Corporation/Vogtle Project),
9.875% due 1/01/1995 (b) 3,060
A+ Aaa 3,250 Georgia Municipal Electric Authority, Power Revenue Bonds,
Series B, 8% due 1/01/1998 (b) 3,534
AA+ Aaa 2,000 Georgia State, General Obligation Bonds, Series B, 6.30%
due 3/01/2010 2,008
AAA Aaa 5,000 Metropolitan Atlanta, Georgia, Rapid Transportation Authority,
Sales Tax Revenue Bonds (Second Indenture), Series A, 6.90% due
7/01/2020 (c) 5,109
AA- A1 8,200 Metropolitan Atlanta, Georgia, Rapid Transportation Authority,
Sales Tax Revenue Bonds, Series O, 6.55% due 7/01/2020 8,021
AAA Aaa 8,100 Municipal Electric Authority of Georgia, Project 1, Sub-Series A,
6.50% due 1/01/2026 (e) 7,962
A+ A 4,750 Municipal Electric Authority of Georgia, Special Obligation
Refunding Bonds, Project 1, Fifth Crossover Series, 6.50% due
1/01/2017 (a) 4,578
A+ A 3,000 Municipal Electric Authority of Georgia, Special Obligation
Refunding Bonds, Second Crossover, 8.125% due 1/01/2017 3,194
<PAGE>
Illinois-- A+ A1 500 Chicago (City of), Illinois, Chicago-O'Hare International Airport
1.0% Revenue Bonds, 10.625% due 1/01/1995 (b) 515
AAA Aaa 2,500 Cook County, Illinois, General Obligation Bonds, Series A, 6.60%
due 11/15/2022 (c)(g) 2,453
AA Aa2 1,850 Illinois Development Finance Authority, Pollution Control Revenue
Refunding Bonds (Central Illinois Public Services Company),
Series B, 7.60% due 9/01/2013 1,955
Indiana-- NR* Aaa 3,250 Indiana State Educational Facilities Authority Revenue Bonds
2.9% (University of Notre Dame Project), 6.70% due 3/01/2025 3,245
A+ A1 1,000 Indiana State Office Building Commission, Capital Complex Revenue
Bonds (State Office Building II Facility Refunding), Series D,
6.90% due 7/01/2011 1,027
A+ A1 3,200 Indiana State Office Building Commission, Correctional Facilities
Program Revenue Bonds, 6.40% due 7/01/2011 3,136
A+ A1 2,250 Indiana Transportation Finance Authority, Highway Revenue Bonds,
Series A, 8.125% due 6/01/1998 (b) 2,471
AA+ Aaa 5,000 Indianapolis, Indiana, Local Public Improvement Bond Bank (City
Guaranteed), Series A, 5.90% due 1/10/2014 (g) 4,598
AA Aa2 1,000 Petersburg, Indiana, Pollution Control Revenue Bonds (Indianapolis
Power and Light Company), 9.625% due 9/01/2012 1,052
</TABLE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Schedule of Investments as of December 31, 1994 (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Rating Rating Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Kentucky-- NR* A $ 3,000 Kentucky State Turnpike Authority, Economic Development Road
1.4% Revenue Bonds, Series 1987-A, 8.25% due 7/01/1997 (b) $ 3,255
A+ A 4,000 Kentucky State Turnpike Authority, Resource Recovery Road,
Revenue Refunding Bonds, Series A, 8% due 7/01/2003 4,323
Louisiana-- AAA Aaa 5,000 New Orleans, Louisiana, Public Improvement Bonds, 7% due
0.9% 9/01/2019 (d)(g) 5,100
Maine--0.8% AA- A1 4,480 Maine State Housing Authority, Mortgage Purpose Revenue Bonds,
Series D, 6.80% due 11/15/2025 4,296
<PAGE>
Massachu- AAA Aaa 1,000 Massachusetts State Port Authority Revenue Bonds, 13%
setts--3.0% due 7/01/2013 (a) 1,631
A+ A1 5,900 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (Brigham and Women's Hospital Issue), Series D,
6.75% due 7/01/2024 5,674
A1+ VMIG1 2,100 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (Capital Asset Program), Variable Rate Demand Notes,
Series B, 4.65% due 1/03/1995 (c)(h) 2,100
AAA Aaa 2,550 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (Northeastern University), Series E, 6.55% due
10/01/2022 (c) 2,524
AAA Aaa 1,390 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (University Hospital), Series C, 7.25% due 7/01/2019 (c) 1,441
A+ Aa 3,000 Massachusetts State, Housing Finance Agency, Single-Family Housing
Revenue Bonds, Alternative Minimum Tax, Series 38, 7.20% due
12/01/2026 3,012
Michigan-- AA Aa 1,500 Michigan State Hospital Finance Authority, Hospital Revenue Bonds
2.0% (Henry Ford Health System), Series A, 7% due 7/01/2010 1,517
AAA Aaa 2,000 Michigan State Strategic Fund, Limited Obligation Revenue Refunding
Bonds (Detroit Edison Company Project), Collateralized Series BB,
7% due 5/01/2021 (e) 2,093
AAA Aaa 1,000 Michigan State Strategic Fund, Limited Obligation Revenue Refunding
Bonds (Detroit Edison Company Project), Collateralized Series CC,
6.95% due 9/01/2021 (d) 1,021
AAA Aaa 1,000 Michigan State Strategic Fund, Limited Obligation Revenue Refunding
Bonds (Detroit Edison Company Pollution Control Bonds Project),
Collateralized Series DD, 6.875% due 12/01/2021 (d) 1,014
AA Aa 1,250 Royal Oak, Michigan, Hospital Finance Authority, Hospital Revenue
Bonds (William Beaumont Hospital), Series D, 6.75% due 1/01/2020 1,216
AAA Aaa 2,000 Saint Clair County, Michigan, Economic Development Corporation,
Pollution Control Revenue Refunding Bonds (Detroit Edison Company
Project), Collateralized Series DD, 6.05% due 8/01/2024 (e) 1,826
AA Aa 2,000 University of Michigan, University Revenue Refunding Bonds,
Hospital Series A, 5.75% due 12/01/2012 1,790
Minnesota-- AA+ Aa 4,350 Minnesota State, Housing Finance Agency, Single-Family Mortgage
2.1% Revenue Bonds, Series M, Alternative Minimum Tax, 6.70% due
7/01/2026 4,158
AAA Aaa 5,000 Southern Minnesota Municipal Power Agency, Power Supply System
Revenue Bonds, Series A, 8.125% due 1/01/1998 (b) 5,454
AAA Aaa 1,600 Southern Minnesota Municipal Power Agency, Power Supply System
Revenue Bonds, Series 1984-B, 11% due 1/01/1995 (b) 1,648
Montana-- AA+ Aa 5,600 Montana State, Single-Family Housing Board Program, Alternative
1.0% Minimum Tax, Series B-2, 6.90% due 6/01/2025 5,427
Nebraska-- A+ A1 5,000 Nebraska Public Pcwer District, Revenue Refunding Bonds, 6.125%
0.9% due 1/01/2015 4,665
</TABLE>
<PAGE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Schedule of Investments as of December 31, 1994 (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Rating Rating Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Nevada--1.2% AAA Aaa $ 2,000 Clark County, Nevada, Pollution Control Revenue Refunding Bonds
(Nevada Power Co. Project), Series B, 6.60% due 6/01/2019 (d) $ 1,976
NR* NR* 2,000 Clark County, Nevada, School District, General Obligation,
School Improvement Bonds (Limited Tax), 8% due 3/01/1998 (b) 2,181
NR* Aaa 2,295 Nevada, Single-Family Housing Division Program, Series E,
Alternative Minimum Tax, 7.05% due 4/01/2027 2,266
New Jersey-- AA A 2,900 Jersey City, New Jersey, General Obligation Bonds, 6.65% due
7.9% 2/15/2013 (g) 2,910
AA A 3,030 Jersey City, New Jersey, General Obligation Bonds, 6.65% due
2/15/2014 (g) 3,035
AAA Aaa 5,000 New Jersey Economic Development Authority, Revenue Refunding Bonds
(RWJ Health Care Corporation), 6.50% due 7/01/2024 (i) 4,929
AA- Aa 2,500 New Jersey Economic Development Authority, Trenton Office Complex
Revenue Bonds, 6% due 6/15/2012 2,358
AAA Aaa 1,000 New Jersey Health Care Facilities Financing Authority Revenue
Refunding Bonds (Hackensack Medical Center), 6.625% due 7/01/2017 (d) 1,003
AAA Aaa 1,500 New Jersey Sports and Exposition Authority, Convention Center,
Luxury Tax Revenue Refunding Bonds, Series A, 6.25% due 7/01/2020 (c) 1,448
A+ Aa 5,000 New Jersey Sports and Exposition Authority, State Contract Revenue
Bonds, Series A, 6.50% due 3/01/2019 4,957
AA- A1 2,900 New Jersey State Highway Authority (Garden State Parkway), General
Revenue Refunding Bonds, 6% due 1/01/2016 2,688
AAA Aaa 3,000 New Jersey State, Housing and Mortgage Finance Agency, Home Buyer
Revenue Bonds, Series L, 6.65% due 10/01/2014 (c) 2,974
A A 2,000 New Jersey State Turnpike Authority, Turnpike Revenue Refunding
Bonds, Series A, 6.75% due 1/01/2008 2,053
A A 12,000 New Jersey State Turnpike Authority, Turnpike Revenue Refunding
Bonds, Series C, 6.50% due 1/01/2016 11,878
AA A1 2,500 Rutgers State University, New Jersey, Revenue Refunding Bonds
(State University of New Jersey), Series A, 6.50% due 5/01/2018 2,485
New York-- A- Aaa 3,000 New York City, New York, General Obligation Bonds, Series A,
16.6% 8% due 8/15/2001 (b)(g) 3,411
A- Baa1 3,000 New York City, New York, General Obligation Bonds, Series C,
Subseries C-1, 7.50% due 8/01/2020 (g) 3,077
A- Baa1 2,000 New York City, New York, General Obligation Bonds, Series D,
7.50% due 2/01/2016 (g) 2,049
A- Baa1 2,500 New York City, New York, General Obligation Bonds, Series D,
7.50% due 2/01/2019 (g) 2,562
<PAGE> AA Aa 1,000 New York State Dormitory Authority, Cornell University Revenue
Bonds, Series A, 7.375% due 7/01/2030 1,048
AAA Aa 1,000 New York State Dormitory Authority, Saint Vincent's Hospital
and Medical Center of New York, Mortgage Revenue Bonds, 7.40%
due 8/01/2030 (f) 1,038
BBB+ Baa1 3,250 New York State Dormitory Authority, State University Educational
Facilities Revenue Refunding Bonds, Series B, 7% due 5/15/2016 3,243
A Aa 1,800 New York State Environmental Facilities Corporation, Water
Pollution Control, Revolving Fund Revenue Bonds, Series A, 7.50%
due 6/15/2012 1,901
A Aa 1,425 New York State Environmental Facilities Corporation, State Water
Pollution Control, Revolving Fund Revenue Bonds (New York City
Municipal Water Finance Authority Project), Series A, 7% due
6/15/2012 1,467
AA- Aaa 500 New York State Environmental Facilities Corporation, State Water
Pollution Control, Revolving Fund Revenue Bonds, Series B, 7.50%
due 3/15/2011 529
</TABLE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Schedule of Investments as of December 31, 1994 (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Rating Rating Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New York A A $11,650 New York State Local Government Assistance Corporation Revenue
(concluded) Bonds, Series A, 6.875% due 4/01/2019 $ 11,723
A A 9,000 New York State Local Government Assistance Corporation Revenue
Bonds, Series A, 6.50% due 4/01/2020 8,717
AAA Aaa 1,515 New York State Medical Care Facilities Finance Agency, Mental
Health Services, Facilities Improvement Revenue Bonds, Series A,
7.80% due 2/15/1999 (b) 1,666
AAA Aaa 640 New York State Medical Care Facilities Finance Agency, Mental
Health Services, Facilities Improvement Revenue Bonds, Series A,
7.80% due 2/15/2019 679
BBB+ Baa1 975 New York State Medical Care Facilities Finance Agency, Mental Health
Services, Facilities Improvement Revenue Bonds, Series B, 7.875%
due 8/15/2020 1,031
AAA Aaa 3,500 New York State Medical Care Facilities Finance Agency Revenue Bonds
(New York Hospital Mortgage), Series A, 6.80% due
8/15/2024 (e)(f) 3,511
AA Aa 6,140 New York State Power Authority, General Purpose Revenue Refunding
Bonds, Series V, 8% due 1/01/2017 6,607
AAA Aa 13,750 New York State Power Authority, General Purpose Revenue Refunding
Bonds, Series Z, 6.50% due 1/01/2019 13,504
A+ Aa 5,100 Triborough Bridge and Tunnel Authority, General Purpose Revenue
Bonds, Series X, 6.625% due 1/01/2012 5,181
A+ Aa 9,575 Triborough Bridge and Tunnel Authority, General Purpose Revenue
Bonds, Series X, 6.50% due 1/01/2019 9,359
A- A1 5,325 Triborough Bridge and Tunnel Authority, Special Obligation
Refunding Bonds, Series B, 6.875% due 1/01/2015 5,356
AAA Aaa 2,325 Triborough Bridge and Tunnel Authority, Special Obligation
Refunding Bonds, 6.25% due 1/01/2012 (e) 2,266
<PAGE>
New York & AA- A1 10,750 Port Authority of New York and New Jersey, Consolidated Bonds,
New Jersey-- 72nd Series, 7.35% due 10/01/2027 11,237
2.4% AA- A1 1,825 Port Authority of New York and New Jersey, Consolidated Bonds
78th Series A, 6.50% due 4/15/2011 1,831
North A- Aaa 1,330 North Carolina Eastern Municipal Power Agency, Power System
Carolina-- Revenue Refunding Bonds, Series A, 6.50% due 1/01/2018 (a) 1,324
2.0% AAA Aaa 3,000 North Carolina Municipal Power Agency No. 1, Catawba Electric
Revenue Refunding Bonds, 6% due 1/01/2011 (c) 2,849
A A 4,975 North Carolina Municipal Power Agency No. 1, Catawba Electric
Revenue Refunding Bonds, 6.25% due 1/01/2017 4,625
AAA Aaa 2,000 North Carolina Municipal Power Agency No. 1, Catawba Electric
Revenue Refunding Bonds, 5.75% due 1/01/2020 (c) 1,773
Ohio--3.1% AAA Aaa 3,000 Hamilton, Ohio, Electric System Mortgage Revenue Bonds,
Series B, 8% due 10/15/1998 (b)(d) 3,304
AAA Aaa 8,650 Hamilton, Ohio, Electric System Mortgage Revenue Refunding
Bonds, Series A, 6% due 10/15/2023 (d) 8,057
AAA Aaa 2,000 Ohio State Building Authority, State Correctional Facilities,
Revenue Bonds, Series 1985-B, 9.75% due 3/01/1995 (b) 2,079
AAA NR* 350 Ohio State Water Development Authority, Revenue Refunding and
Improvement Bonds, Series R, 8% due 12/01/2000 (b) 374
AAA Aaa 2,210 Ohio State Water Development Authority, Safe Water Refunding and
Improvement, Water Development Revenue Refunding Bonds, 9.25%
due 6/01/1995 (b)(e) 2,320
AAA Aaa 775 Toledo, Ohio, Sewer System, Revenue Refunding Bonds, Series B,
7.75% due 11/15/2017 (c) 822
</TABLE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Schedule of Investments as of December 31, 1994 (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Rating Rating Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Oregon--0.1% A1+ VMIG1 $ 400 Oregon State, Veteran Welfare Bonds, Variable Rate Demand Note,
Series 73F, 4.95% due 12/01/2017 (h) $ 400
Pennsylvania-- AA- A1 2,000 Commonwealth of Pennsylvania, General Obligation Bonds, Series A,
1.5% 6.50% due 11/15/2011 (g) 2,001
AAA Aaa 2,055 North Penn, Pennsylvania, Water Authority Revenue Bonds, 7% due
11/01/2024 (d) 2,110
NR* P1 3,600 Pennsylvania State Higher Educational Facilities Authority,
College and University Revenue Bonds (Temple University), Variable
Rate Demand Note, 5.75% due 10/01/2009 (h) 3,600
<PAGE>
Puerto Rico-- AAA NR* 2,000 Puerto Rico Commonwealth, Public Improvement Bonds,
0.8% General Obligation Bonds, 7.70% due 7/01/2000 (b) 2,233
A Baa1 2,000 Puerto Rico Commonwealth, Highway and Transportation Authority,
Highway Revenue Bonds, Series T, 6.625% due 7/01/2018 1,971
Rhode Island-- AAA Aaa 2,500 Rhode Island Port Authority and Economic Development Corporation,
0.5% Revenue Refunding Bonds (Shepard Building Project), Series B,
6.75% due 6/01/2025 (e) 2,481
South AAA Aaa 2,000 North Charleston, South Carolina, Sewer District Revenue Refunding
Carolina-- Bonds, Series A, 6% due 7/01/2018 (c) 1,847
2.1% AAA Aaa 2,210 Piedmont Municipal Power Agency, South Carolina, Electric Revenue
Refunding Bonds, 6.50% due 1/01/2014 (d) 2,196
AAA Aaa 1,675 Piedmont Municipal Power Agency, South Carolina, Electric Revenue
Refunding Bonds, 6.25% due 1/01/2018 (d) 1,583
AAA Aaa 3,000 Piedmont Municipal Power Agency, South Carolina, Electric Revenue
Refunding Bonds, 6.75% due 1/01/2019 (d) 3,039
AAA Aaa 2,600 Piedmont Municipal Power Agency, South Carolina, Electric Revenue
Bonds, Special Optional Redemption Defeased, 11% due 1/01/1995 (b) 2,678
Tennessee-- AAA Aaa 1,000 Metropolitan Nashville Airport Authority, Tennessee, Airport
0.2% Revenue Refunding Bonds, Series C, 6.60% due 7/01/2015 (d) 992
Texas--10.2% AAA Aaa 2,000 Austin (City of), Texas, Combined Utility Systems Revenue Bonds,
Prior Lien, 6.25% due 11/15/2019 (c) 1,901
AAA Aaa 2,000 Austin (City of), Texas, Combined Utility Systems, Revenue
Refunding Bonds, Prior Lien, 6.50% due 5/15/2011 (e) 2,005
AAA Aaa 2,000 Brazos River Authority, Texas, Revenue Refunding Bonds (Houston
Light and Power Co.), Series B, 6.375% due 4/01/2012 (c) 1,972
AA+ Aa 5,000 Harris County, Texas, Toll Road Subordinate Lien, Revenue
Refunding Bonds, 6.75% due 8/01/2014 (g) 5,058
AAA NR* 1,250 Harris County, Texas, Toll Road and Subordinate Lien, Revenue
Refunding Bonds, 8.125% due 8/01/1998 (b)(g) 1,377
AA+ Aa 5,000 Harris County, Texas, Toll Road Subordinate Lien, Series A, 6.50%
due 8/15/2015 (g) 4,971
AAA Aaa 6,000 Houston, Texas, Water and Sewer Systems, Junior Lien, Revenue
Refunding Bonds, Series C, 6.375% due 12/01/2017 (e) 5,841
AAA Aaa 5,000 Lower Colorado River Authority of Texas, Junior Lien, Revenue
Refunding Bonds, 6% due 1/01/2017 (e) 4,600
AAA Aaa 2,000 Lower Colorado River Authority of Texas, Priority Revenue Refunding
Bonds, Series B, 6% due 1/01/2015 (e) 1,857
AAA Aaa 4,700 Sabine River Authority, Texas, Pollution Control Revenue
Refunding Bonds (Collateral-Texas Utilities Electric Company
Project), 6.55% due 10/01/2022 (d) 4,640
AAA Aaa 5,300 San Antonio, Texas, Water System Revenue Refunding Bonds,
6.50% due 5/15/2010 (c) 5,314
</TABLE>
<PAGE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Schedule of Investments as of December 31, 1994 (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Rating Rating Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Texas AAA Aaa $ 2,000 San Antonio, Texas, Water System Revenue Refunding Bonds, 6%
(concluded) due 5/15/2016 (c) $ 1,872
AA Aa 1,000 State of Texas, Veterans, Land Refunding Bonds, 6.50% due
12/01/2021 (g) 979
AAA Aaa 2,000 Texas Municipal Power Agency Revenue Bonds, 14.625% due 3/01/1997
(b) 2,376
AA Aa 6,500 Texas State Veterans Housing Assistance, Alternative Minimum Tax,
Series A, 7% due 12/01/2025 (g) 6,443
AAA Aa 2,000 Texas Water Development Board, State Revolving Fund, Senior Lien
Revenue Bonds, 6% due 7/15/2013 1,875
AA+ Aa1 1,000 University of Texas System, Permanent University Fund, Refunding
Bonds, 6.50% due 7/01/2011 1,005
AA+ Aa1 1,000 University of Texas System, Permanent University Fund Refunding
Bonds, Series A, 6.25% due 7/01/2013 968
Utah--1.6% AA Aa 5,500 Intermountain Power Agency, Utah, Power Supply Revenue Refunding
Bonds, Series G, 9.375% due 7/01/2018 5,723
AA Aa 1,000 Intermountain Power Agency, Utah, Power Supply Revenue Refunding
Bonds, Series D, 8.625% due 7/01/2021 1,090
AA Aa 2,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds (IHC
Hospital Inc.), 6.25% due 2/15/2023 1,805
Virginia-- AA Aa 2,750 Commonwealth of Virginia, Transportation Contract Revenue Bonds,
2.1% 7.80% due 3/01/1998 (b) 2,981
AA Aa 4,500 Henrico County, Virginia, Industrial Development Authority, Public
Facility Lease Revenue Bonds (Henrico County Regional Jail Project),
7% due 8/01/2013 4,656
AA A1 4,000 Richmond, Virginia, Public Improvement, Revenue Refunding Bonds,
Series B, 6.25% due 1/15/2018 (g) 3,824
Washington-- AA+ Aa1 6,900 Seattle, Washington, Refunding Bonds, 6.50% due 3/01/2017 6,772
2.3% AAA Aaa 3,000 Tacoma, Washington, Refuse Utility Revenue Bonds, 7% due 12/01/2019
(e) 3,073
AA Aa 2,000 Washington State, General Obligation Bonds, Series A, 6.75%
due 2/01/2015 2,033
Wisconsin-- AA Aa 4,990 Wisconsin Housing and Economic Development Authority, Home Ownership
2.4% Revenue Bonds, Series 1, 6.75% due 9/01/2017 4,838
AA Aa 1,000 Wisconsin Housing and Economic Development Authority, Home
Ownership Revenue Bonds, Series 1, 6.75% due 9/01/2015 979
AAA Aaa 2,000 Wisconsin Public Power Incorporated System, Power Supply System
Revenue Bonds, Series A, 7.40% due 7/01/2000 (b)(e) 2,197
AAA Aaa 5,000 Wisconsin State Health and Educational Facilities Authority
Revenue Bonds (Children's Hospital of Wisconsin Inc. Project),
6.50% due 8/15/2021 (d) 4,798
<PAGE>
Total Investments (Cost--$529,921)--99.6% 535,304
Other Assets Less Liabilities--0.4% 1,893
--------
Net Assets--100.0% $537,197
========
<FN>
(a)Escrowed to maturity.
(b)Prerefunded issues.
(c)MBIA Insured.
(d)FGIC Insured.
(e)AMBAC Insured.
(f)FHA Insured.
(g)Unlimited Tax.
(h)The interest rate is subject to change peri-
odically based upon the prevailing market rate.
The interest rate shown is the rate in effect at
December 31, 1994.
(i)FSA Insured.
(j)GNMA/FNMA Collateralized.
*Not Rated.
Ratings of issues shown have not been
audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Statement of Assets and Liabilities
<CAPTION>
As of December 31, 1994
<S> <C> <C>
Assets:
Investments, at value (identified cost--$529,920,752) (Note 1a) $535,303,500
Cash 111,882
Receivables:
Interest $ 12,408,518
Securities sold 1,219,483
Capital shares sold 3,537 13,631,538
------------
Prepaid registration fees and other assets (Note 1d) 14,053
------------
Total assets 549,060,973
------------
<PAGE>
Liabilities:
Payables:
Securities purchased 10,525,868
Capital shares redeemed 519,143
Investment adviser (Note 2) 218,365 11,263,376
------------
Accrued expenses and other liabilities 601,016
------------
Total liabilities 11,864,392
------------
Net Assets $537,196,581
============
Net Assets Consist of:
Common Stock, $0.01 par value, 100,000,000 shares authorized $ 306,832
Paid-in capital in excess of par 544,033,385
Undistributed investment income--net 1,283,866
Accumulated realized capital losses--net (13,810,250)
Unrealized appreciation on investments--net 5,382,748
------------
Net Assets:
Equivalent to $17.51 per share based on 30,683,209 shares outstanding $537,196,581
============
</TABLE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Statement of Operations
<CAPTION>
For the Year Ended December 31, 1994
<S> <C> <C>
Investment Income (Note 1c):
Interest and premium and discount earned $ 37,213,629
Expenses:
Investment advisory fees (Note 2) $ 2,893,985
Transfer agent fees 1,796,522
Printing and shareholder reports 157,106
Accounting services (Note 2) 70,583
Registration fees (Note 1d) 56,717
Custodian fees 50,769
Professional fees 49,757
Pricing services 35,577
Directors' fees and expenses 15,714
Other 8,682
------------
Total expenses 5,135,412
------------
Investment income--net 32,078,217
<PAGE>
Realized & Unrealized Loss on Investments (Notes 1c & 3):
Realized loss on investments--net (13,810,250)
Change in unrealized appreciation on investments--net (59,047,712)
------------
Net Decrease in Net Assets Resulting from Operations $(40,779,745)
============
See Notes to Financial Statements
</TABLE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
December 31,
1994 1993
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Investment income--net $ 32,078,217 $ 32,704,233
Realized gain (loss) on investments--net (13,810,250) 8,819,734
Change in unrealized appreciation/depreciation on investments--net . (59,047,712) 24,407,096
------------ ------------
Net increase (decrease) in net assets resulting from operations (40,779,745) 65,931,063
------------ ------------
Dividends & Distributions to Shareholders (Note 1e):
Investment income--net (32,226,191) (32,611,400)
Realized gain on investments--net -- (8,089,293)
------------ ------------
Net decrease in net assets resulting from dividends and distributions to shareholders (32,226,191) (40,700,693)
------------ ------------
Capital Share Transactions (Note 4):
Net increase (decrease) in net assets resulting from capital share transactions (29,385,788) 77,405,763
------------ ------------
Net Assets:
Total increase (decrease) in net assets (102,391,724) 102,636,133
Beginning of year 639,588,305 536,952,172
------------ ------------
End of year* $537,196,581 $639,588,305
============ ============
<FN>
*Undistributed investment income--net $ 1,283,866 $ 1,431,840
============ ============
</TABLE>
<PAGE>
<TABLE>
The Municipal Fund Accumulation Program, Inc.
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended December 31
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $ 19.79 $ 18.93 $ 18.63 $ 17.83 $ 18.09
--------- --------- --------- --------- ---------
Investment income (loss)--net 1.03 1.09 1.15 1.23 1.30
Realized and unrealized gain (loss) on investments--net (2.28) 1.11 .30 .80 (.26)
--------- --------- --------- --------- ---------
Total from investment operations (1.25) 2.20 1.45 2.03 1.04
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (1.03) (1.09) (1.15) (1.23) (1.30)
Realized gain on investments--net -- (.25) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions (1.03) (1.34) (1.15) (1.23) (1.30)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 17.51 $ 19.79 $ 18.93 $ 18.63 $ 17.83
========= ========= ========= ========= =========
Total Investment Return:
Based on net asset value per share (6.44%) 11.99% 8.08% 11.83% 6.03%
========= ========= ========= ========= =========
Ratios to Average Net Assets:
Expenses .89% .86% .88% .91% .97%
========= ========= ========= ========= =========
Investment income--net 5.54% 5.52% 6.15% 6.76% 7.23%
========= ========= ========= ========= =========
Supplemental Data:
Net assets, end of year (in thousands) $537,197 $639,588 $536,952 $435,224 $359,291
========= ========= ========= ========= =========
Portfolio turnover 61% 23% 24% 36% 20%
========= ========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
The Municipal Fund Accumulation Program, Inc.
Notes to Financial Statements
1. Significant Accounting Policies:
The Municipal Fund Accumulation Program, Inc. (the "Program") is
registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The following
is a summary of significant accounting policies followed by the
Program.
(a) Valuation of securities--Portfolio securities are valued by the
Program's pricing agent, Kenny S&P Evaluation Services ("Kenny").
The method used by Kenny to value the Program's securities is to
obtain "quotes" on comparable securities of comparable quality and
to value such Program securities similarly. These values are not
necessarily bids or actual last sale prices, but are estimates of
the price at which the pricing agent believes the Program could sell
such portfolio securities. The Board of Directors has examined the
methods to be used by the Program's pricing agent in estimating the
value of portfolio securities and believes that such methods will
reasonably and fairly approximate the price at which portfolio
securities may be sold and will result in a good faith determination
of the fair value of such securities.
(b) Income taxes--It is the Program's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income (net of amortization of
premium and discount) is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(e) Dividends and distributions to shareholders--Dividends from net
investment income are declared and paid monthly. Distributions of
capital gains are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Program has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). The general partner of FAM
is Princeton Services, Inc. ("PSI"), an indirect
wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."),
which is the limited partner.
<PAGE>
FAM is responsible for the management of the Program's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Program. For such
services, the Program pays a monthly fee of 0.50%, on an annual
basis, of the value of the Program's average daily net assets. The
Investment Advisory Agreement obligates FAM to reimburse the Program
to the extent the Program's expenses (excluding interest, taxes,
brokerage fees and extraordinary items) exceed 2.5% of the Program's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. No fee payment will be made to the
Adviser during any fiscal year which would cause such expenses to
exceed the foregoing expense limitations applicable at the time of
such payment.
FAM has entered into an Administrative Agreement with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), Prudential Securities, Inc.,
Dean Witter Reynolds Inc., and Smith Barney Shearson, Inc. (the
"Administrators"), whereby the Administrators perform certain
administrative duties on behalf of FAM.
The Administrators receive a monthly fee from FAM equal to 0.20%, on
an annual basis, of the Program's average daily net assets and have
agreed to reimburse FAM for a portion of the reimbursement of
expenses to the Program as described above, required to be made by
FAM.
Accounting services are provided to the Program by FAM at cost.
Certain officers and/or directors of the Program are officers and/or
directors of FAM, MLPF&S, PSI, and/or ML & Co.
Notes to Financial Statements
(concluded)
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended December 31, 1994 were $350,733,010 and
$374,091,775, respectively.
Net realized and unrealized gains (losses) as of December 31, 1994
were as follows:
Realized Unrealized
Losses Gains
Long-term securities $(13,810,250) $ 5,382,748
------------ -----------
Total $(13,810,250) $ 5,382,748
============ ===========
<PAGE>
As of December 31, 1994, net unrealized appreciation for Federal
income tax purposes aggregated $5,382,748, of which $11,584,053
related to appreciated securities and $6,201,305 related to
depreciated securities. The aggregate cost of investments at
December 31, 1994 for Federal income tax purposes was $529,920,752.
4. Capital Share Transactions:
Transactions in capital shares were as follows:
For the Year Ended Dollar
December 31, 1994 Shares Amount
Shares sold 7,126,473 $131,603,572
Shares issued to shareholders
in reinvestment of dividends 1,681,732 30,840,576
------------ ------------
Total issued 8,808,205 162,444,148
Shares redeemed (10,439,409) (191,829,936)
------------ ------------
Net decrease (1,631,204) $(29,385,788)
============ ============
For the Year Ended Dollar
December 31, 1993 Shares Amount
Shares sold 10,957,746 $215,246,276
Shares issued to shareholder
in reinvestment of dividends
and distributions 1,998,028 39,298,500
------------ ------------
Total issued 12,955,774 254,544,776
Shares redeemed (9,010,119) (177,139,013)
------------ ------------
Net increase 3,945,655 $ 77,405,763
============ ============
5. Capital Loss Carryforward:
As of December 31, 1994, the Program had a net capital loss
carryforward of approximately $6,600,000, all of which expires in
2002. This amount will be available to offset like amounts of any
future taxable gains.
<PAGE>
<AUDIT-REPORT>
Independent Auditors' Report
The Board of Directors and Shareholders,
The Municipal Fund Accumulation
Program, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of The Municipal
Fund Accumulation Program, Inc. as of December 31, 1994, the related
statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Program's management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at December
31, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
The Municipal Fund Accumulation Program, Inc. as of December 31,
1994, the results of its operations, the changes in its net assets,
and the financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
Deloitte & Touche, LLP
Princeton, New Jersey
February 3, 1995
</AUDIT-REPORT>
Officers and Directors
Arthur Zeikel--President and Director
Ronald W. Forbes--Director
Cynthia A. Montgomery--Director
Charles C. Reilly--Director
Kevin A. Ryan--Director
Richard R. West--Director
Terry K. Glenn--Executive Vice President
Vincent R. Giordano--Senior Vice President
Donald C. Burke--Vice President
Gerald M. Richard--Treasurer
Susan B. Baker--Secretary
<PAGE>
Custodian and Transfer Agent
The Bank of New York
90 Washington Street
New York, NY 10286
